Flashcards
Investment Planning Part 1
Cards in this deck (53)
- 1Independent Financial Advisersunbiased financial advice from whole of market
- 2Tied Agentscan only advise on products of one provider
- 3Multi tied agentsrecommend from a limited panel of providers
- 4Wealth Management Services can be offered either on aDiscretionary Basis or
Non Discretionary/Advisory basis - 5Fund supermarket is aninternet based one stop shop for retail investment funds
- 6A wrap platform issimilar to a fund supermarket but used by advisors - may have pension plans and investment bonds as well as funds
- 7Fund of funds can be either fettered or unfettered what does this meanfettered invests only in funds run by the same management group.
unfettered can invest in any - 8a multi manager product does whatruns segregated mandates by individually selected fund managers
- 9Variants of Collective Investment Schemes are calledMutual Fund - US
SICAV - Europe
Unit Trust or OEIC - UK & Ireland - 10UCITS funds do whatcomply with EU rules; seen as measure of quality and marketed in Middle East & Asia as result
- 11Benefits of Collective Investmenteconomies of scale
diversification
professional investment management
access to markets, assets classes or investment strategies not normally available to individual investor
possible tax deferral
the benefit of regulatory oversight - 12What is the key difference between an authorised and unauthorised fundOnly authorised funds can be marketed to retail investors
- 13Open ended funds can do whatissue and redeem shares at any time.
- 14Management Fees arethe cost of the investment adviser managing the portfolio
- 15Distribution and services fees arethe fees paid to cover marketing and selling shares, responding to investor enquiries
- 16Other expenses arecustody charges, legal & accounting expenses and other administrative expenses
- 17front end load is whata sales charge made at purchase of fund paid to broker
- 18purchase fee is whata fee paid to the mutual fund to cover costs of purchase
- 19A back-end load isa fee paid when shares are sold aka deferred sales charge
- 20What is a Redemption feepaid by an investor to the fund when redeeming
- 21An exchange fee may be charged whenan investor wants to switch to another fund within the same group or family of funds
- 223 typical shares classes of mutual funds Class A Class B Class CA - impose for end load but lower annual expenses
B - impose back end load and operating expenses
C - impose operating expenses and front end load but at lower level than A & B. Typically higher annual costs - 23When is a share trading at a premiumWhen the share price is above the net asset value
- 24When is a share trading at a discountWhen the share price is below the Net Asset Value
- 25What is an ETFAn exchange traded fund, listed and traded on Stock Exchange which typically tracks the performance of an index
- 26What are the 2 types of Index Replication for ETFPhysical
or
Synthetic - 27Describe Physical ReplicationCan be achieved by either Full replication or Sampling. Full the funds tries to mirror the index by holding shares in exactly the same proportion as in the index itself.
Sampling - choosing shares which are representative of the index - 28How does an ETF achieve Synthetic ReplicationBy entering into SWAP agreements with 1 or more counterparties
- 29Advantage of Physical ReplicationSimplicity
- 30Disadvantages of Physical ReplicationHigher Costs as more trading
Greater Tracking Error - 31Advantages of Synthetic ReplicationLower costs
Lower tracking error - 32Disadvantage of Synthetic ReplicationGreater counterparty risk
- 334 potential benefits of a Structured Product arePossible Capital Protection
Tax efficient access to fully taxable investments
enhanced returns
reduced risk - 344 ways Private Equity can recoup investment in businessthe investee company buys it out
the PE firm sells it shares to another investor
trade sale - sale of the company shares to another firm
the company achieves a stock market listing - 35Sukuk Investments areIslamic bonds linked to underlying tangible/intangible assets .
- 36money weighted return does whatcompares the value of a portfolio from the start of period, plus capital introduced with the end value
- 37time-weighted returnwas designed to remove the distortion of capital being introduced/withdrawn from calculating portfolio performance
- 38what is the usual benchmark for risk free rate of returnshort dated government bonds or treasury bills
- 39what is the risk premiumthe additional return above the risk free rate of return
- 40What is volatilitythe changes in a share's value
- 41High volatility meansa security's price can change dramatically in short periods of time
- 42Low volatility meansthe security's price does not fluctuate dramatically
- 43How is volatility measuredBy standard deviation of the returns from the mean
- 44What is Total ReturnThe return achieved taking into account growth in capital value plus income received
- 45What is BetaA measure of the average historic sensitivity of a fund's return to the wider market
- 46Beta of 1 meansthe stock has the same volatility as the market as a whole
- 47Beta greater than 1 meansthe stock will be expected to move more than the market as a whole
- 48A beta of 1.5 meansit has a volatility 50% greater than the market portfolio i.e. it can be expected to move half as much again or for every 1% market move it moves 1.5%
- 49Beta of less than 1 meansthe stock is less volatile than the market so can be expected to move less e.g. 0.7 means 30% less
- 50Alpha is whatthe return of any outperformance of a fund/portfolio against it's benchmark
- 51Unsystematic risk iscompany specific risk
- 52Systematic risk isrisk stemming from broad equity market movements or market risk derived mainly from changes in economic factors
- 53Systemic risk refers tothe breakdown of the financial system
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- Description
- Investment Service Providers, Investment Funds, Other Investment Vehicles, Risk and Return,
- Created by
- callum.thomson
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